Argus Makes European Gasoline Methodology Changes
Evolves Eurobob benchmarks in response to environmental mandates after extensive consultation
London, 3 May 2023
Environmental mandates are driving a shift in gasoline consumption across Europe towards a grade with a 10% maximum bioethanol content (E10), up from the 5% maximum previously used (E5). Across Europe, including the UK, 21 countries have already either switched to the new grade or are in the process of phasing it in, and E10 is increasingly the most widely consumed grade of gasoline in northwest Europe. Global energy and commodity price reporting agency Argus, whose Eurobob oxy barge gasoline price is used as the key benchmark to price physical and derivative contracts across Europe, has announced changes that will reflect the new market dynamics.
E5 and E10 are the “finished” gasolines sold at the pump in Europe, with bioethanol added. In the European barge market, however, unfinished grades – before the addition of the biofuel component – are typically the most actively traded on the spot market. “Eurobob oxy” is the gasoline blendstock to which 5% ethanol is added to make the finished E5 grade. “Eurobob non-oxy” is the blendstock to which 10% ethanol is added to make the finished E10 grade.
As consumers buy more E10, the market is moving towards non-oxy as the standard. For the past year, volumes of spot market trade on Eurobob non-oxy (E10) barges have exceeded that of Eurobob oxy (E5) in many months.
From 1 January 2024, Argus will calculate its Argus Eurobob oxy (E5) price as a premium/discount to the non-oxy price (E10). The Eurobob non-oxy (E10) barge price will continue to be assessed using a volume weighted average of transactions agreed during the trading day.
Argus will also use the Eurobob non-oxy (E10) financial derivative as the basis of its Eurobob non-oxy (E10) and the Eurobob oxy (E5) prices. Financial derivatives for both grades referencing Argus prices are listed on futures exchanges.
Argus Media chairman and chief executive Adrian Binks said: “Argus is committed to ensuring our benchmark prices reflect prevailing market behaviour. The European gasoline market is embracing the E10 grade, and our extensive consultation with market participants showed an overwhelming majority agree our Eurobob gasoline benchmark methodology should evolve.”
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